Factory-Built Housing Giants 2001

Factory-built housing companies suffered a downturn in profits in 2000.

April 01, 2001

While their stick-built counterparts were celebrating yet another year of economic expansion and a correspondingly strong housing market, the factory-built Giants were watching the clock nervously and waiting for better days ahead. Among the top 25 factory-built housing Giants, total units dropped 16.28% in 2000 to 274,158. Revenue for the same period was off 14.1% to $9.07 million from $11.04 million the previous year.

Several factors contributed to the downturn in the manufactured housing sector:

Excess inventory. Market demand and inventory levels are out of whack. Simply, there is too much capacity.

In response, the manufactured housing industry is taking steps to correct the problem. Manufacturers have shuttered more than 50 plants in the past two years. They’ve begun to track placements of units rather than shipments, and the industry as a whole is improving a poorly organized retail distribution system.

Easy money. Because this sector performed so well through much of the last decade, new lenders bought into the business. More marginal buyers were offered financing, which attracted still more retailers to what looked like a booming market. Manufacturers stepped up production to supply the retailers and a glut in inventory resulted.

While these factors contributed to the decline in this sector in 2000, they’ve also been the impetus for change, and hopefully, a healthier industry.

In a report issued by the Manufactured Housing Institute, David Thwaits, senior vice president at lender CIT, explained, "The industry recognizes that the mistakes it made were made collectively. Lenders, manufacturers and retailers are beginning to sow seeds for a rebound in 2001."

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